ASIA FRONTPAGE Alan Greenspan, former chairman of the US Federal Reserve, predicted on Wednesday the US would make “changes” to the burdensome financial and corporate governance requirements driving companies out of US markets.
Mr Greenspan initially supported the passage of the Sarbanes-Oxley law – the landmark 2002 legislation introduced after the Enron and WorldCom scandals – but said on Wednesday he was “disturbed” when companies started favouring London over New York for their flotations.
“The Sarbanes-Oxley Act has created significant problems for foreign investors with its regulatory structure,” he said at a question and answer session at the Asian Financial Centres conference in Seoul, organised by the Financial Times. “I am nevertheless acutely aware and disturbed by the fact that initial public offerings have moved away from the US – and to a large extent have moved to London.”
Although the basis of the law was a definite advance in terms of governance, some parts of it created too many burdens for business, he said, emphasising the provision that forces companies to have their internal controls certified by auditors.
Q&A: Greenspan and Giuliani
“My impression is that there will be changes,” said Mr Greenspan. But in Washington it is far from clear what could be done about the law. One top lobbyist said lawmakers would not tackle the issue in 2006 and that tweaking the bill in Congress was not a viable solution.
The London Stock Exchange has taken advantage of the US regulatory environment in its pitch to attract Asian listings.
Seoul pledges level playing field for foreigners
However, Rudy Giuliani, the former New York mayor who also addressed the conference, said he thought London and Tokyo would eventually adopt similarly tough regulations.
Additional reporting by Stephanie Kirchgaessner in Washington
